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IRS has released its official standard mileage deductions for 2019, and the business rate has been increased by 3.5 cents over the 2018 rate. This is the largest year to year jump in a very long time.

While these amounts aren’t going to be used on actual tax returns for more than a year, many businesses use the official IRS rate for billing customers and for reimbursing employees; so this advance notice is useful right now.

As with all of their parody articles, this one is very concise and pithy, as Bill O’Reilly used to say. Check out the full thing, but this paragraph does an excellent job of describing the very real and very dangerous mindset of the bozos in power in Sacramento.

"Just as we’ve done with various businesses and private individuals, we will levy ever-increasing taxes on the fires," he said proudly. "Once they realize they’re being taxed to death, they’ll move on to greener pastures like Texas or Arizona." Brown said the taxes will be earmarked for public funding and pensions, but quickly added the state will likely "blow through the cash" on crazy pet projects faster than they could bring it in.

[Update 12/13/18]: Proving once again that the PRC Rulers are themselves parodies of actual leaders, they have one-upped the Babylon Bee by proposing to tax cell phone texts.

So, the question is still a very valid one. Is there anything that the crazies on the left won’t tax in order to steal more money for themselves? If George Harrison were still around, he would have to add so many things to his TaxMan song that it would be twice as long.

Posted in Calif, parody | Comments Off on What won’t the PRC Rulers tax?

Even with all of the changes from the TCJA, there are still some items that are adjusted periodically for increases in the cost of living. IRS has done the calculations for 2019 and released the following press release.

With all of the scam phone calls from phony IRS agents, threatening arrest over bogus tax debts unless money is sent to them via gift cards and other crazy methods, it’s great to see that some of them have been caught and will be residing in the Gray Bar Hotel for a while.

With Hurricane Michael barreling down on us, I was wondering when IRS would announce their official special delayed filing due date for 2017 income tax returns, as had been their customary policy during other large destructive weather events. I was checking their news page every few hours for the past week.

The hurricane was declared a Federal Disaster by Trump, one of IRS’s main criteria for allowing more time for those affected by a humongous natural catastrophe to get their tax returns in. I knew they would eventually get around to issuing an official news release regarding this event. However, considering that the extended 2017 1040s are due in the mail in three days from now, by Monday, October 15, today’s news release was just in time for those of us who were affected by Michael. Now, people can focus on the clean-up tasks rather than stressing to meet the Oct 15 filing deadline.

As most people know, the most complicated aspect of the TCJA was the brand new Section 199A deduction for 20% of Qualified Business Income (QBI). In a perfect example of hasty, sloppy, vague, poorly explained legislation, how this new tax break will work in the real world is a big mystery. In my 43 years in the tax biz, I can’t recall a more poorly defined bit of tax legislation.

Since the TCJA was signed into law in December, there has been an unending stream of articles, books, webinars and seminars on how we tax pros are supposed to calculate and handle this new QBI deduction. To say that there are huge discrepancies between how people have been interpreting this new IRC Section 199A is a massive understatement. Many tax analysts have made the correct assumption that the actual real life application of this new deduction won’t be firmed up for several years, after disputes with IRS over real life tax returns have been adjudicated in court.

The IRS has also been studying this issue and has just today published their first draft of proposed regulations on the QBI deduction. Contrary to popular belief, what IRS thinks about a certain tax matter doesn’t automatically make it indisputable gospel. It is just their opinion and taxpayers and their advisors are free to exercise their own differing opinions if there is some valid logic behind them. With a law as vaguely written as TCJA, there are gigantic opportunities for a slew of different interpretations that will make just as much logical sense as what the IRS has come up with and will in the future.

This time of year is when IRS routinely starts working on updating the tax forms for next Tax Season. The draft versions of the forms are posted on the IRS website for people to comment on. I like to check it every few days for the new releases of forms that I use a lot.

I rarely say this, but this year, with the sloppily written TCJA taking effect, I actually feel sorry for the IRS form designers, as well as the State tax agencies that base their taxes on Federal numbers. As any tax pro will tell you, our GOP rulers in DC passed a tax law that in many respects resembles a big pile of elephant poop and IRS has the thankless task of trying to bring it to life by modifying existing tax forms and designing new ones. With such aspects of the TCJA as the brand new and extremely convoluted 20% QBI deduction, who knows what the form or schedule for that will look like?

Whether this qualifies as actual tax simplification or not is open for interpretation. As they mention in the news release, they are eliminating the 1040A and 1040EZ forms and forcing everyone to start with the same newly revised basic 1040. Not having prepared a 1040A or EZ in well over 35 years because they didn’t have a place for paid preparers to sign, I personally have no problems with those forms biting the dust.

However, the claim that tax returns will now be “postcard sized” is not exactly the entire story. While it may be true that the basic 1040 form will be half the size physically (8.5” X 5”) as the normal 1040 has always been (8.5” X 11”), it will still be necessary to attach a lot of supplementary forms and schedules to support the numbers being entered onto the 1040 summary pages. It is no secret that I have never used e-filing with IRS or any State tax agency due to the complexity of the returns I prepare which require a lot of supporting pages. With double sided copies, we often send out tax returns for clients to file that are one or two inches thick. With this new tax law, I don’t think we will have any reason to retire the heavy duty staplers we use.

On the IRS’s draft form web-page, they have just released their first public look at the new 1040 for 2018, along with the first six new backup schedules, creatively named Schedules 1 through 6. These backup Schedules basically consist of the lines that were removed from the 2017 1040 in order to make it half-page size. Whether that works out well or not remains to be seen. With all of the other forms and schedules full sized, I think it will be a bit awkward to mix them with half pages. It doesn’t look like the IRS Service Centers will be having much fun processing paper returns with mixtures of different size pages.

I have downloaded all of them and taken quick looks at them. You can download them yourselves from the IRS website or from the following direct links.

Most people know that, being on the other end of the planet, Australia’s weather seasons are backwards from ours here in the USA. When we are in the Summer heat, they are in Winter’s cold, and vice versa.

What I didn’t know until recently is that their Tax Season is also opposite ours. While we report our personal income tax data on a January 1 – December 31 calendar year basis, the Aussies are required to keep their books on a tax year from July 1, 2017 through June 30, 2018. They even have a special name for June 30, EOFY (End Of Financial Year). Their tax return “lodging” time for that tax year is from July 1, 2018 through October 31, 2018.

Click here for a lengthy discussion by the Gruen panelists on how many products are advertised for June 30 EOFY sales, including the fact that last minute purchases of business items are tax deductible. It’s very similar to our December 31 year-end sales here in the US.

It’s not just income tax laws that are constantly changing and requiring strategic modifications. Estate planning is also a moving target that requires constant course corrections, especially with the recent big tax law changes.

Just as I have always considered it extremely dangerous for people to attempt to prepare their own tax returns, it is at least ten times riskier to try to handle estate planning without the assistance of an experienced estate attorney. The books and software that are available at places such as Nolo Press are great for learning about the estate planning process and preparing for your meeting with the attorney who will be doing the actual paperwork, but trying to do everything on your own is insane.